Interior’s Mass. lease sale will be largest ever

Source: Phil Taylor, E&E reporter • Posted: Wednesday, June 18, 2014

The Interior Department today will announce plans to auction more than 1,100 square miles of waters off the Massachusetts coast for offshore wind projects, the largest lease sale of its kind in U.S. history.

Interior Secretary Sally Jewell is scheduled to make the announcement this afternoon in Boston alongside Gov. Deval Patrick (D) and Bureau of Ocean Energy Management acting Director Walter Cruickshank.

The agency is releasing a final environmental assessment and a proposed sale notice for Atlantic Ocean waters that the Energy Department has estimated could support up to 10 offshore wind farms of 500 megawatts each.

BOEM said it plans to auction four separate leases within the wind energy area, which, if all four sell, would generate at least $1.5 million in bonus bids.

The leasing area about a dozen miles south of Martha’s Vineyard was significantly downsized years ago to avoid an area of high sea duck concentration, as well as an area important to commercial and recreational fishermen.

The leasing area is just east of BOEM’s Massachusetts-Rhode Island wind energy area, where Deepwater Wind New England LLC last year obtained leasing rights to build what it hopes will be a 1,000-megawatt project — the largest ever planned in the United States.

Just north is the proposed 468-MW Cape Wind project, which hopes to be the first commercial wind farm build in U.S. waters.

BOEM is accepting 60 days of public comment on the Massachusetts sale notice. A date and time for the online auction has not been set.

Doug Pfeister, acting president of the Offshore Wind Development Coalition, an industry trade group, said the decision to divide the wind energy area into four leases could allow for intriguing competition among developers.

“I think the competition will be good,” he said this afternoon. “It’s an attractive site. … People are very familiar with offshore wind and support it.”

According to the proposed sale notice, winning bidders would have one year to submit a site assessment plan to erect meteorological towers and survey the project site. Lease holders would then have the exclusive right to submit a construction and operating plan, which would trigger a separate National Environmental Policy Act review.

Lease holders would pay $3 per acre annually for rent until commercial production begins. Then, the projects would pay a fixed operating fee, similar to a royalty, determined in part by how much power is produced and the price of electricity.

The sale notice also indicates that the auction winners will be determined by both the highest bids and other criteria indicating a developer’s likelihood for project success.

For example, any bidders who have already lined up a buyer for their electricity will be given special consideration, as well as those that have executed a “community benefits agreement.”

The agency’s environmental assessment considered, among other things, potential impacts to endangered North Atlantic right whales and coastal scenery in addition to potential mitigation options such as seasonal vessel restrictions, speed limits and enhanced monitoring.

The draft EA anticipated construction of up to five meteorological towers and 10 buoys, resulting in up to 6,500 vessel round trips over a five-year period.

Environmental groups have backed the leasing plan.

“The finding of no significant impacts seems to be a reasonable decision,” said Jack Clarke, director of public policy and government relations for Mass Audubon. “The size, timing and location, is right.”

Mass Audubon, for example, praised BOEM for excluding waters important to winter sea ducks and said its support for the wind energy area was premised in part on the broader threat of rapid climate warming, oil spills, strip mining, air pollution and proposals to expand nuclear power.

“Rising sea levels and severe coastal storms related to the earth’s warming flood low-lying barrier beaches and islands that serve as critical habitat for coastal birds including the federally-listed endangered roseate tern and threatened piping plover,” the group said in comments on the EA in late 2012.

The group said BOEM should take particular pains to ensure development in the Massachusetts wind area does not harm long-tailed ducks and the federally listed endangered roseate tern.

While offshore wind has grown at a steady clip in Europe, the United States has yet to break ground on any commercial projects, despite Obama administration plans to develop 10 gigawatts by 2020 and 54 GW by 2030.

Firms face steep construction costs, a lack of transmission infrastructure, financing hurdles and some local opposition to having turbines on the ocean horizon.

According to the DOE study, one of the biggest challenges developers face in the Massachusetts leasing areas is water depths that range from 35 meters to 65 meters.

In April 2012, BOEM announced it had received 10 nominations of interest from industry for the Massachusetts leasing area, including from Deepwater Wind New England LLC, Fishermen’s Energy LLC, enXco Development Corp. and Spanish firm Iberdrola Renewables Inc.